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That special moment between deciding whether to buy now or wait for the next gold price dip. With prices dropping to $1,885 levels, many shoppers in the UAE will be taking those decisions. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Gold jewellery sales in the UAE just had its best three-month run since the second quarter of 2017. And that’s despite gold prices blazing away to $2,050 an ounce in early March and remaining at $1,900 plus levels for the better part of that month.

A sizeable 12.5 tonnes of gold jewellery were bought by shoppers in the first quarter, much of which during January and February when prices were in the $1,800 plus levels. For a brief period in late January, it had even dropped to $1,789 an ounce range. If March had not seen gold climb to $2,000 levels, overall first quarter sales could have even touched 15 tonnes, say retailers.

The trends indicate that shoppers, both resident and tourists, were ready to buy gold at $1,900 levels. In Dubai, many of the tourists visitors who turned up for the Expo also seem to have bought a bit of jewellery as well, which all added up to the best quarterly showing in five years, according to the latest quarterly stats from the London-based World Gold Council.

Similar demand patterns

“Except for India and China, jewellery buying in the rest of the world was quite resilient,” said Louise Street, Senior Analyst at World Gold Council. “Worldwide jewellery consumption was down only 7 per cent - it is far from the hugely negative picture that many were expecting because of the high prices (in March).

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“Even in China, the actual buying remains resilient despite the lockdowns in Shanghai and Shenzhen.” Image Credit: Supplied

Gold continues its dream run, which started in early 2020 after COVID-19 broke out and then went on to be a pandemic. In August that year, gold shot up to a record $2,032 an ounce and have been in the $1,850 range for the most part since. This March, gold pushed past $2,000 levels again after the start of the Russia-Ukraine conflict drove concerns about the state of the global economy.

“In the UAE, shoppers are ready to buy when the Dubai Gold Rate averages Dh200-Dh208 a gram,” said Abdul Salam K.P., Vice-Chairman of Malabar Gold & Diamonds. “Recent weeks have seen gold well above the Dh220/g mark for 22k - now that it has dropped to Dh218, we should see some buying action in the first week of May for ‘Akshaya Trithiya’.”

Bring on the weddings

According to Louise, a drop in the number of weddings taking place in most parts of the world over the last two pandemic-infested years did hurt gold jewellery sales, especially outside of India and China. That could change now that COVID-19 fears are receding and the wedding scene becomes active.

In India during the first quarter of 2022, the wedding factor was another reason for subdued gold sales. “The lack of auspicious gold buying days and wedding days in January was followed by a sharp rise in the gold price in late February/early March - a combination that proved detrimental to jewellery buying, according to the WGC’s first quarter report.

“The gold price breached the psychological Rs50,000 per 10 gram at the end of February, before rising to above Rs53,000 in March. In response, consumers postponed gold purchases, hoping for a price correction - or at least a stabilisation.” (They may be getting it - gold is around Rs48,620 currently.)

Stocking up on gold coins

‘Safe haven’ and ‘hedge against inflation’ were the twin themes driving gold’s dynamics in the first three months, whether it was institutional investors or shoppers. This explains why gold bars and coins was 11 per cent above the five-year average, pulling in a hefty 282 tonnes.

“A lot of the time there was a lot of ‘buying the dip’ whenever gold prices turned softer,” said Louise. “Research keeps showing that consumers worldwide see gold as a store of value.”

That a few more weddings could make for some heavy buying action through the rest of the year. Of course, provided that prices remain under $1,900…